(Bloomberg) — Boeing Co. agreed to buy back Spirit AeroSystems Holdings Inc. for $37.25 per share in an all-stock deal that values the supplier at $4.7 billion, reintegrating the company as the embattled US planemaker tries to fix is manufacturing defects.
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The total transaction value is about $8.3 billion, including Spirit’s last reported net debt, according to a statement early on Monday. Rival Airbus SE will also take over parts of Spirit that make parts for its operations, and the European planemaker will be paid $559 million to take over the assets, according to a separate release.
“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” Boeing Chief Executive Officer Dave Calhoun said in the statement.
Boeing is seeking to take back full control Spirit after an accident in January on board a 737 Max-9 airliner revealed quality and manufacturing shortcomings at both Boeing and its most important supplier and led to a rethinking of their relationship.
Airbus said it entered a “binding term sheet agreement” with Spirit that will see the planemaker take on facilities that make A350 fuselage sections in Kinston, North Carolina, and St. Nazaire in France. It will also seek to buy the A220 wing and mid-fuselage production in Belfast, Northern Ireland, and Casablanca, Morocco, as well as A220 pylon manufacturing at Spirit’s headquarters, it said.
The transaction is set to close in the middle of next year. Boeing said it’s taking over “substantially all Boeing-related commercial operations,” as well as additional commercial, defense and aftermarket operations.
Spirit has faced growing financial pressure and scrutiny alongside Boeing after the door-shaped panel on a 737 Max 9 model blew out minutes after takeoff. Shipments of 737 fuselages have plummeted as Boeing steps up its inspections in Kansas and back at home near Seattle, and declined to accept aircraft structures with missing components or incomplete work.
For Boeing, the deal brings a key supplier for the 737, 787 Dreamliner and other commercial jets back in-house at a time when the company is feeling the financial strain from the slowed-down output. Boeing lost about $4 billion in cash in the first quarter and is set to bleed a similar amount in the current three months of the year. The company’s credit rating is hovering one level above speculative grade, and management is keen to avoid slipping into junk territory.
The Wichita campus that builds most of the 737 airframe for Boeing along with the nose sections of the 787 Dreamliners had been at the heart of several defects as it grappled with post-Covid workforce turnover. Reintegrating Spirit aims to help Boeing stabilize its supply chain and gain greater control of its aircraft production.
PJT Partners was the financial advisor to Boeing, with Goldman Sachs & Co and Consello acting as additional advisors.
–With assistance from Siddharth Philip.
(Updates with details of asset split from fifth paragraph.)
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